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People Trying to Save Prefer Accounts That Are Hard to Tap

Research suggests policy makers could make retirement accounts even more restrictive without reducing their appeal

By

Shlomo Benartzi and

John Beshears

Feb. 12, 2017 10:08 p.m. ET

Imagine this scenario: Somebody offers you $5,000 to save for a future financial goal,such as a vacation or home purchase. You can allocate the money across three accounts, all with the same interest rate. The first account comes with no restrictions, meaning you can withdraw the money whenever you want. The second account comes with a 10% penalty if you withdraw the money within the first year. The third account prohibits withdrawals within the first year.